ETON PROPERTIES PHILIPPINES, INC.

Nature of the Entity

Eton Properties Philippines, Inc. is the real estate arm of the LT Group.
Originally registered with the Securities and Exchange Commission under the
name Balabac Oil Exploration and Drilling Co., Inc. in 1971, the Company
subsequently became Eton Properties Philippines, Inc. in February 2007.
Eton Properties carries a diversified portfolio and is involved in both the
development and sale of residential subdivisions, high-rise towers, and midrise buildings, as well as in the leasing of residential units, retail spaces and
offices. To date, it has around 26 projects under its wing and has completed
7 high-rise condominiums, 1 mid-rise development, 3 residential
subdivisions, 2 commercial centers, 1 events venue, and 2 BPO hubs.
Among the completed residential high-rises are The Eton Residences
Greenbelt, Eton Parkview Greenbelt, and Belton Place in Makati; One Archers
Place, Eton Baypark Manila, and 8 Adriatico in Manila; and Eton Emerald Lofts
in Ortigas Center. Other residential and commercial projects are under
construction and due for completion between 2015 and 2017.
Eton Properties aims to constantly deliver unique developments that meet
the needs of the market. Two of the companys landmark projects are Eton
City and Eton Centris.
Eton City covers a vast area of prime land located along both sides of the
South Luzon Expressway in Sta. Rosa, Laguna. Close to 600 hectares is
presently being developed out of its 1,000-hectare master plan. At its full
development, Eton City shall feature a central business district; multiresidential enclaves from affordable to high-end; institutional centers such as
schools and research firms; commercial and retail establishments, as well as
recreational areas and parks.
Eton Centris, on the other hand, is a 12-hectare business district and lifestyle
destination located at the corner of E. delos Santos Avenue and Quezon
Avenue in Quezon City. It hosts an extensive selection of retail shops and
restaurants, as well as an events space and one of Metro Manilas largest
BPO hubs. The development strategically sits at the gateway of Quezon
Citys Triangle Park Central Business District.

Eton Properties is committed to deliver quality projects and shall continue to

provide a mix of residential, office, and retail lifestyle centers across prime
locations in Metro Manila and emerging growth areas of the country.
The following are the wholly-owned subsidiaries of EPPI.
Belton Communities, Inc. (BCI)
Belton Communities, Inc. is a wholly-owned subsidiary of Eton Properties
Philippines, Inc. and has been registered with the SEC last November 5,
2007. The primary activity of BCI is the same with that of its Parent.
Currently, BCI is focusing in developing mid-rise residential buildings catered
for mid-income earners.
Eton City, Inc. (ECI)
Eton City, Inc. is a wholly-owned subsidiary of the Eton Properties, Inc. and
has been registered with SEC last October 8, 2008. The primary activity of
ECI is the same with that of its Parent. ECI is created primarily to manage
the projects of the Group in Laguna.
Currently, ECI is focusing in developing residential lots and residential house
and lots for sale.
First Homes, Inc. (FHI)
First Homes, Inc. is a wholly owned subsidiary of Eton Properties Philippines,
Inc. and has been registered with SEC last October 15, 2010. The primary
activity of the Company is the same with that of its Parent.
Eton Properties Management Corporation (EPMC)
Eton Properties Management Corporation is a wholly owned subsidiary of
Eton Properties Philippines, Inc. and has been registered with SEC last
September 29, 2011. The primary purpose of the company is to manage,
operate, lease, in whole or in part, real estate of all kinds, including
buildings, house, apartments and other structures of the Corporation or of
other persons provided that they shall no engage as property manager of a
real estate investment trust.
Currently, the Company is focusing in developing high-rise condominiums
primarily catered from low-income earners.

Board of Directors
NAME

POSITION

Lucio C. Tan

Chairman

Lucio K. Tan, Jr.

President and CEO

Joseph T. Chua

Chief Operating Officer

Harry C. Tan

Director

Ramon S. Pascual

Director

Michael G. Tan

Director

Juanita T. Tan Lee

Director & Treasurer

Washington Z. Sycip

Director

Antonio L. Alindogan, Jr.

Independent Director

Wilfredo E. Sanchez

Independent Director

Johnip G. Cua

Independent Director

Management Team
NAME

POSITION

Josefino C. Lucas

Deputy COO

Wilfredo Z. Pineda

Chief Financial Officer

Karlu T. Say

Group Head Admin & Human Resources

Marie Angeli W. Samala

First Vice President PMG & Purchasing

Nathaniel I. Cabungcal

Vice President Property Management

Carlos B. Carlos

Vice President Technical Services

Alejandro T. Lim

Assistant Vice President Technical Services

Noriel U. Santos

Assistant Vice President Technical Services Eton City

Lennie S. Magnaye

Vice President Controller

Rita C. Reboso

Assistant Vice President Accounting

Christine L. Ong

Vice President Treasury

Ma. Irma B. Tan

Vice President Corporate Research and Risk Insurance

Management

Charles Clifford F. Matta

Vice President Sales and Marketing

Gerardo I. Maurico

Vice President Information and Technology

Lawrence Wee

General Manager, Hotel Property

Michael Leslie D. Delos Reyes

Senior Assistant Vice President Legal

Jonas T. Siy

Assistant Vice President Planning and Design

Carlos C. Chua

Assistant Vice President Internal Audit

Jaime M. Clemena Jr.

Assistant Vice President Administration

Gladys Grace K. Uy

Assistant Vice President Human Resources

Martha S. Herrera

Carolina M. Estor

Assistant Vice President Marketing, PR and Corporate

Communications
Assistant Vice President Sales Support

Corporate Strategy and Planned Activities

Moving away from greatest revenue generator in prior years,
residential and housing sales, into creating office spaces for BPO
industries due to higher margins (around 80%) evidenced by increase
in net income by 161% from 2014
IPO in 2 years
Focused since 2017 on:
Development of premium and mid-income residential and
commercial buildings
Constructions of IT and BPO-ready office buildings
Creation of mixed-use master-planned township projects that
incorporate residential, office, commercial, leisure and institutional
components
Development and management of hotels and shopping centers
Now moving into more diverse property portfolio to include
Hospitality
Leisure
Mixed use development (ETON WestEnd Square) to include 2
residential towers, office bldg., and boutique mall
Increase shareholder value through initiation of plans that are set
beyond Luzon
First step is through the acquisition of 36 hectare of land in Cebu
for another total lifestyle destination
Expand current Centris WALK to accommodate more retail and dining
spaces, making a total lifestyle destination

Industry Trend on Real Estate / Construction

The accelerated economic growth during the second quarter was
echoed by the office property market, where high occupancy levels
have been sustained by the BPO industry. An increase in tourist arrivals
failed to uphold the hotel market, where a softer gaming market and
new completions will suppress occupancy rates in the short term. The
resurgence of the manufacturing sector has led to increased demand
for industrial space, with a further boost set to come from the
implementation of vital infrastructure projects. Meanwhile, the outlook
for the residential condominium sector remains subdued amid
oversupply concerns.
The BPO market continues to lift the office market, with no sign of
letting down

 Construction delays due to the lack of skilled labor will continue to

affect the new supply to be delivered for all sectors.
Residential condominiums in the core areas will continue to see rising
vacancies amid a deluge of new supply in the fringe areas. Meanwhile,
delays in office completions will lead to even lower vacancies for office
buildings.
Rates for condos are still seen to continue to soften because of the new
supply coming up. While office demand is strong, all-time highs in
office construction will rein in sharp upward rental rate movements.
Meanwhile, improvements in industrial rents will continue.
Quarterly Property
Report.pdf

External challenges come from the slowing Chinese economy, a

looming rise in interest rates, the stronger US dollar and weaker
Chinese yuan, which will dampen investor appetite.
High demand for office and retail space should influence development
activity in 2016.
The office sub-sector will benefit from the growth of the BPO,
knowledge process outsourcing (KPO) and e-commerce industries in
the country.
The industrial real estate sector will receive comparatively less interest
in terms of new developments.
BMI Industry
View.docx

Local developers are very aggressive in buying land and increasing

their already sizeable portfolios as the bullish market shows no signs of
slowing down.
There is still significant investor interest in Philippine property;
however, the everlasting obstacle of structural shortage of suitable
investment products discourages investors, especially those from
overseas. Thus transaction volume remains relatively low and is mainly
concentrated on development sites

 The strong economic performance is keeping the real estate market

buoyant across all sectors.
BPO industry will be the main driver for office take-up while also
improving employment situation, increasing disposable income that
will eventually translate to higher demand in residential and retail
markets.
2015 Property
Outlook.pdf

Philippines Real Estate SWOT

Strengths
The Philippines has a well-educated, English-speaking workforce.
This workforce and the growing business process outsourcing (BPO)
industry will increase demand for the office real estate.
Greater job creation will retain young Filipino worker who would
otherwise look to work abroad, benefitting the office and retail sectors.
Growing
remittances
support
increasing
affluence,
creating
opportunities for retail real estate development.
Weaknesses
The Philippines is almost 100% dependent on imported construction
equipment, with Japan, the US and Singapore the main sources of
supply. This could hinder real estate development, as the necessary
materials will be harder to acquire.
Underdeveloped real estate investment trust (REIT) market.
Lack of foreign real estate corporations, due to foreign restrictions on
local investments.
Corruption and a lack of business transparency could deter potential
foreign investment.
Opportunities
Growting BPO industry will create more demand for premium office
space.
Industrial activity is picking up, which should boost demand for
industrial real estate.
As the established BPO and financial centres become saturated, we
expect demand for office space to rise elsewhere in the country.

 Closer economic integration with ASEAN should increase international

investment and demand for the Philippines' exports, creating demand
for commercial real estate space.
Threats
The Philippines' economy is vulnerable to external shock, which could
put international investors off. A potential slowdown in China could hit
the country's economy.
The high level of risk aversion among banks and other providers of
capital, a risk to infrastructure that could see project delays and there
affect the development of commercial real estate.
The government has moved to limit banks' exposure to real estate
assets.
Weakening exports as a result of a stronger dollar and depreciation in
China's economy will weigh in on the Industrial real estate sub-sector.
Land availability is limited in some cities, driving rental rates up and
reducing demand and firms seek to relocate
Financial Highlights
Reported gross revenues of Php2.48 billion in 2015 (9.0% higher than
its 2014 revenues of Php2.28 billion)
Sustained strong demand for business spaces from the business
process outsourcing (BPO) industry pushed rental income by 58% yearon-year to Php1.17 billion, or 47% of revenues
Real Estate sales accounted for Php1.31 billion or 53% of revenues, a
15% drop from 2014.
The Company ended 2015 with a net income of Php313.25 million, a
161% increase from its 2014 net income of Php119.86 million

Possible Problems / Potential Opportunities

1. Return of jobs to country of origin. This could result in non-recovery of
capital expenditures.
2. Tenants moving to lower cost cities/areas/countries which arent in the
scope of ETON
3. Huge competition from big brand names in the Philippines which will
eat ETONs market share (i.e. Ayala).
4. Leasing doesnt require a large upfront payment, unlike owning, which
could require years for recovery of capital expenditures.
5. Lease spaces will not be taken up resulting to idle, cash-draining
resource.

6. Possible unforeseen capital costs such as replacement of mechanical

systems, structural repairs, and roof/parking lot replacement which
will not be covered by tenants
7. Weak corporate social responsibility. Only corporate responsibility so
far since 2007 is planting 1000 tree saplings in the span of two years.
8. Strategic objectives might not be reached due to weak consumer
demand.
9. Insufficient marketing and self-promotion resulting in only BPO
buildings fully leased out but residential units arent sold out.
10.
Yearly reassessment of fees which could turn-off tenants
11.
Possible acquisition of buildings in strategic locations to further
bolster the surge of demand from BPO industries
12.
Improving financial condition of millennials should give the firm
pressure to still cater to urban housing
13.
Trends dictate that in 2030, Manila could be one of the top 18 as
city with highest gross domestic product. This entails that more
demand for office spaces is expected.

Potential Advisory Services

Portfolio strategy and location advisory

Delivery strategy and operational model
Governance and control
Process and technology
Strategic services
Risk mitigation, processes and control
Technology and implementation
Project and risk assessments
Project management oversight advisory
Cost evaluation

Opportunities for SGV Advisory

1. Business and Finance Modelling for ETON as they put a lot of
importance in their revenue and being the market leader. This will
influence their long and short-term decisions with regards to their
operations.
2. Fast growth by ETON and the pouring of billions of dollars into CAPEX
means that it should have solid ground for growth.

a. This requires a strong internal audit team to assess strategic

direction of the company.
b. Internal audit team to calibrate the risks presented
3. Fast-growth means recruiting the best talents to further the
companys plans, provide seamless execution, and furthering the
companys vision and mission. SGVs employment solutions in
effectively managing employees by drawing up organization
structures anchored on business strategies, designing jobs with clear
duties and responsibilities and reporting relationships, and
determining appropriate staffing patterns. Also, provide professional
services on specific human resource systems that enhance employee
performance such as job evaluation, competency modeling,
performance management, and compensation and benefits.
4. Large outflow of money is being cashed out to attain the 5 year leader
plan of the president of ETON. Problems come in difficulty in serving
loans, investing in short-term investments. SGVs Advisory team can
help them manage their cash flows and investments for best return.
5. Inability to manage all business process is one of the hindrances that
will soon catch up with fast growth. Strong internal operation is a
must. This requires strong foundation in companys control and the
controls to minimize errors and possible frauds.
6. Customer service might be affected as more people flock to the
establishments that ETON put up.
7. Over dependence on key suppliers or lenders might create possible
problems. Chargebacks, bribes, agreements under the table which
couldnt be seen by the board might hinder the companys fast
growth. Inquisitive audit might do the job.
8. Overall enterprise risk management
9. If there are possible acquisitions of buildings or small developers, M&A
advisory from TAS could be expected for the job.
10.
With lots of acquisitions of parcels of lands, deals with tenants,
contracts with government, banks, SGV Advisory could come in to
provide Contract Risk Services.
11.
Credit valuation of tenants
12.
Foreign Currency risk
13.
Acquisition of highly talent employees. FIDS could come to have
background checks.